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Bitter harvest for local retailers

GoPro and now DJI are centralising their ‘go to market’ models, with promotions landing in Australian consumers’ in-trays direct from their respective US eCommerce websites.

As we reported in April, GoPro announced it intended to ‘let go’ most of its international distribution network and move to a direct-to-customer model. The GoPro.com website accounted for 40-45 percent of sales this year, up from about 10 percent in 2019, and said it expects direct-to-customer sales to contribute the majority of its revenue next year as it continues to dis-intermediate from conventional retailing.

GoPro is undercutting its supporting retailers by over $200 with this exclusive direct-to-customer, contact-harvesting promotion.

It has a way to go in dispensing with retailers in Australia. We checked Ted’s, Camera House and Digital Camera Warehouse and each of these national retail chains were still stocking the latest GoPro Hero 9 action camera.

But GoPro’s more recent move to discount the Hero 9 and a raft of other products against the prices it insists retailers charge may hasten that separation: The ‘Black Friday’ deal on the GoPro.com website is a bundle consisting of the Hero 9 plus floating hand grip, spare battery, magnetic swivel clip and 32GB MicroSD card, PLUS a one-year GoPro subscription, for $589.95. The same bundle, less the GoPro subscription, is $799 from local retailers! And if you opt to buy the Hero9 bundle direct from GoPro without the subscription, it’s $729.95. Shipping is free.

The GoPro subscription – renewable each year at $70 – consists of unlimited cloud storage, total no-questions-asked camera replacement on damaged cameras, and ongoing discounts from GoPro.com…Plus a constant barrage of spammy EDMs.

The Black Friday discounts are essentially a high-cost email harvesting exercise, with subscriptions key to the direct- to-customer strategy. GoPro noted when it released its third quarter results at the start of November that it now has 500,000 subscribers and CEO Nick Woodman declared GoPro would exceed its ‘previously stated target of 600,000 to 700,000 paid subscribers by year-end.’ 

The GoPro share price rose about 20 percent on better-than-anticipated third quarter sales and profit results. But share market analysts The Motley Fool (US) questioned whether the high share price is sustainable given GoPro’s strategy: ‘The expansion of GoPro’s subscription platform is encouraging, but investors should realize the company is subsidizing its growth with steep discounts on its cameras and loss-leading perks.

‘Those efforts might generate long-term gains by locking more users into GoPro.com and its cloud-based services, but they won’t significantly boost its sales and earnings. Instead, they could throttle its near-term margins and make it more difficult for GoPro to hit its optimistic earnings targets for 2021.

DJI doesn’t only want your email address, but also wants you to post its advertising on your social media site!

While DJI still has a healthy network of distributors and retailers supporting its marketing efforts, it has also recently increased its direct to customer marketing. It’s latest promotion – as well as offering discounts of up to 30 percent – consisted of giving away a DJI product in each country in which it trades on the six days leading up to Black Friday, November 27.

The rather ingenious twist to the DJI promotion is that consumers have to share the promotion on a social networking site to be in the running to win one of the prizes: ‘Qualify for the DJI Black Friday Giveaway by subscribing and following instructions to share giveaway info on social media, including the hashtag #DJIBF and the event page link.’

Winners have to provide a screenshot as proof that they have shared the giveaway information on social media.

DJI is also giving away a ‘limitless quantity’ of free shipping coupons as part of the promotion – but they are only valid for three days – Novemver 27 – 30.

A global giveaway promotion run from head office is not without complexities. The T&Cs are off-puttingly dense as various rules apply to different regions. While it doesn’t fall foul of the various requirements in Australian states to obtain a permit for what is essentially a game of chance (as the prize pool is too small), it is not being run in Canada, Italy, Portugal or Belgium.

Another issue which may dampen Australian enthusiasm for buying direct is GST. While no-name back street online retailers in Hong Kong may be able to dodge charging GST on goods under $1000, respected brands like GoPro and DJI cannot. GST is included in the price (in Australian dollars) of goods sold from both the https://store.dji.com/au and https://gopro.com/en/au/shop/cameras websites. But if the buyer is purchasing a product for business use, there doesn’t seem to be any way of claiming back GST.

The ATO states that if a purchaser provides a valid ABN to an offshore retailer registered for ‘Simplified GST’, GST does not need to be added. However neither GoPro nor DJI offer GST-free sales to Australian businesses – which would be fine if they could provide a valid tax invoice along with the purchase. But according to the ATO, they can’t unless they have a full GST registration, which in turn requires an ABN. They may as well open a local office under those circumstances!

Then there is the issue of consumer protection. Australia has some of the most robust consumer protection in the world since the introduction of the Australian Consumer Law in 2011. While consumers are still covered by most of its measures when the seller is in another country, GoPro US and DJI US are unlikely to be as responsive as a local retailer.

Warranty repairs? Who knows.

 

 

 

 

 

 

 

 

 

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